Banks stocks sink after JPMorgan announces loss
Friday , May 11, 2012 - 9:30 AM
Major bank stocks fell sharply Friday after JPMorgan Chase surprised investors by announcing a $2 billion trading loss.
JPMorgan's stock dropped 9 percent in early trading, the most of the 30 stocks in the Dow Jones industrial average. Gains in technology, energy and other stocks mitigated the losses. After the first half-hour of trading the Dow was off 18 points at 12,837.
Broader market indicators were mixed. The Standard & Poor's 500 index fell one point to 1,356 and the Nasdaq composite index, which is weighted toward technology stocks, edged up eight points to 2,942.
The direction for financial stocks was clear. JPMorgan led other bank stocks sharply lower after its late Thursday disclosure of a $2 billion loss at a London trading unit.
JPMorgan's blunder comes in the midst of a political battle over how closely to regulate banks, though JP Morgan's CEO Jamie Dimon said the trades would not have been affected by the so-called Volcker rule, expected to take effect this summer.
That didn't stop investors from cutting their exposure to the financial sector. Bank of America fell 2.2 percent, Morgan Stanley was down 4.2 percent, Citigroup fell 3.8 percent, and Goldman Sachs fell 3.9 percent.
Also on Friday, the Labor Department said that the producer price index, which measures price changes before they reach the consumer, dropped 0.2 percent last month. It was the first decline since December and the biggest drop since October. Declines were driven by gas and energy prices.
A measure of consumer confidence from the University of Michigan released Friday morning was better than analysts had expected. The index was at its highest level since January 2008.
Crude and gasoline futures slid again Friday.